Think Ahead

Certificate in
International
Auditing

Revision
Guide

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© 2022 Association of Chartered Certified Accountants
 This revision guide has been created to help you
prepare for the assessment. We hope you find it
useful in aiding your learning.

The primary objectives of the Cert IA are:

• To give you an understanding of the requirements for the audit of financial

statements in compliance with International Standards on Auditing (ISAs)

• To explain the role of the International Federation of Accountants (IFAC)

• To examine the basic principles and essential procedures of ISAs on a

Standard by Standard basis

• To provide guidance on how to apply ISAs in practice, with the aid of

illustrations and exercises.

In order to expand on your knowledge from this course, you may wish to take
out a free subscription for IFAC Standards and technical updates, available from
the IFAC website.

You can work on this course whenever you like, 24 hours a day, seven days
a week.

You decide when you want or need to learn; you decide just how long you will
spend reviewing and revising a topic, and you decide when you are ready to move
on.

It should take you between 20 and 30 hours to complete, but you can take as
long as you wish to complete the course, within the time limit of your course
licence.

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© 2022 Association of Chartered Certified Accountants
Study Tips:

• Make the most of the online materials by doing all the exercises and
the mock assessment to help you prepare for the formal assessment

• Do the mock exam within the allocated time of your formal

assessment (1 hour) to provide you with an accurate experience of
the formal assessment

• Be consistent in your studying with regular breaks

• Plan your learning by creating a study timetable and practising good

time management

• Consider looking at audited financial statements of companies to

help to provide you with additional knowledge and understanding of
financial reporting and auditing.

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© 2022 Association of Chartered Certified Accountants
Module 1
Auditing Standards

Introduction
This module describes IFAC’s role in standard-setting, its pronouncements and the scope and
authority of International Standards on Auditing (ISAs).

Structure of standard setting

What is the “three-tier structure” for global standard setting in the field of audit, assurance,
ethics and education?

IFAC
Mission, organisation and membership
• What is IFAC?
• What is IFAC’s mission?
• How does IFAC serve the public interest?

Standard-setting boards
What are the four independent standard-setting boards of IFAC?

IAASB
Objective and scope
• What is the IAASB’s objective?
• What “due process” is applied in the development of IAASB standard?
• How are IAASB’s exposure drafts and standards approved?
• What are the IAASB’s “engagement standards”?

International Standards on Auditing (ISAs)

• To what do ISAs apply?
• How are ISAs structured?
• Is it possible to depart from relevant essential procedures?
• Can ISAs override local legal or regulatory requirements?

Financial reporting framework

• What are “general purpose financial statements”?
• Apart from IFRS Standards, what is an example of an applicable financial reporting
framework?

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Module 1
Auditing Standards

Audit framework
• What is “reasonable assurance”?
• What does reasonable assurance mean in the context of an audit of financial statements?
How is this expressed?

Reviews and related services

• What level of assurance does a review of historical financial information provide? How is this
expressed?
• What are “related services”? What assurance, if any, do these provide?

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© 2022 Association of Chartered Certified Accountants
Module 2
Overall Objectives

Introduction
This module sets out the requirements of ISA 200 Overall Objectives of the Independent
Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing.

ISA 200
Overall objectives of the auditor
• What are the TWO overall objectives of the auditor?
• When is the auditor required to disclaim an opinion or withdraw (or resign) from an audit
engagement?
• What are the responsibilities of management and those charged with governance (“TCWG”)
for the financial statements? (Hint: As stated in the auditor’s report)

Fundamental concepts
• What alternative phrase is equivalent to “a true and fair view”?
• What is the definition of materiality? (Hint: ISA 320)

Requirements
Ethical
• Which TWO fundamental principles of professional ethics are embodied in the definitions
of independence “of mind” and “in appearance”? What do these fundamental principles
mean?
• What are the other three fundamental principles of professional ethics?

Professional scepticism
• What is professional scepticism?

Professional judgment
• What is professional judgment? Why is it essential to the proper conduct of an audit?

Conduct of an audit of financial statements

• Must the auditor comply with ALL ISAs relevant to the audit?
• When is an ISA “relevant to the audit”?

Scope of an audit
• What does the auditor’s representation “compliance with ISAs” in the auditor’s report mean?
• When may the auditor depart from a relevant essential procedure? What must the auditor
then do?
• What, in summary, are the main stages in the audit process?
• What are inherent limitations in an audit?

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© 2022 Association of Chartered Certified Accountants
Module 3
Audit Documentation

Introduction
This module describes the requirements of ISA 230 Audit Documentation.

ISA 230
Objectives
• What is the objective of the auditor in preparing documentation?

Definitions
• What is audit documentation?
• What is an audit file?
• What is meant by an “experienced auditor”?

Audit procedures performed and audit evidence obtained

Form, content and extent
• What constitutes “sufficient” audit documentation?
• What must be recorded in documenting the nature, timing and extent of audit procedures?
• How may compliance with ISAs be documented?

Significant matters
• Why must discussions of significant matters with management, TCWG, and others, be
recorded?
• What details must be documented?

Departure from relevant requirements

• What must be documented if, in exceptional circumstances, the auditor judges it necessary
to depart from a relevant requirement in an ISA?

Matters arising after the date of the auditor’s report

• What must be documented if, in exceptional circumstances, the auditor performs new or
additional audit procedures or draws new conclusions after the date of the auditor’s report?

Assembly of the final audit file

• What are the requirements for the assembly of the final audit file?

Retention of documents
• What is the retention period for audit documentation?

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© 2022 Association of Chartered Certified Accountants
Module 4
Planning an Audit of Financial Statements

Introduction
This module sets out the requirements of ISA 300 Planning an Audit of Financial Statements and
the related standards on core concepts ISA 320 Materiality in Planning and Performing an Audit
and ISA 570 Going Concern.

ISA 300
• What is the auditor’s objective in planning an audit? What does this involve?
• What is the “overall audit strategy”? What is an “audit plan”?
• What are the benefits of adequate planning?

Going concern (ISA 570)

• What are the objectives of the auditor?
• What are the requirements of IAS1 Presentation of Financial Statements in relation to going
concern?
• What are the respective responsibilities of management and the auditor in assessing the
entity’s ability to continue as a going concern?
• What are the broad classifications of events or conditions that may cast significant doubt on
an entity’s ability to continue as a going concern?

Materiality (ISA 320)

• How is materiality defined in the IFRS® Conceptual Framework for Financial Reporting?
• When is materiality considered in the conduct of an audit?
• What can the auditor reasonably assume about users in the context of their common
information needs?
• What is “performance materiality”?
• What percentages and benchmarks are typically applied in determining materiality?
• What is the relationship between materiality level and level of audit risk?

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© 2022 Association of Chartered Certified Accountants
Module 5
Identifying and Assessing Risks of Misstatement

Introduction
This module details the requirements relating to understanding the entity and the assessment
of risks of material misstatement (ISA 315 (Revised 2019)). It also discusses the components of
the audit risk model.

Risk assessment procedures

• What are risk assessment procedures?
• What is the “spectrum of inherent risk”?
• What is a “significant risk”?
• Why must analytical procedures be performed in risk assessment?

Understanding the entity and its environment

• What understanding of the entity does the auditor need to obtain?
• Why is business risk relevant to the auditor?
• What is the definition of a system of internal control?
• What are the five components of the system of internal control?
• What is a direct control?

Audit risk
• What is audit risk? (Hint: ISA 200)
• What are the three components of the audit risk model and how are they related?
• Which component of audit risk can be varied? And how?

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Module 6
Responses to Assessed Risks

Introduction
This module examines how the auditor responds to the assessed risks of misstatement (ISA
330). It includes the communication of deficiencies in internal control (ISA 265) and audit
considerations when an entity uses a service organisation (ISA 402).

ISA 330
Further audit procedures
• What is a test of controls?
• What is a substantive procedure?
• When is the auditor required to perform tests of controls?
• What factors determine the extent of further audit procedures?

Nature, timing and extent of tests of controls

• Why is inquiry alone insufficient to test the operating effectiveness of controls?
• Why does the absence of misstatements detected by a substantive procedure not prove that
related controls are effective?
• What factors may affect the timing of tests of controls?
• What factors may affect the extent of tests of controls?

Nature, timing and extent of substantive procedures

• What factors are relevant to designing and performing substantive procedures?
• What factors are relevant to the timing of substantive procedures?
• What factors are relevant to the extent of substantive procedures?

ISA 265
• When does a deficiency in internal control exist?
• What is a significant deficiency?
• To whom should significant deficiencies be communicated?

ISA 402
• When does ISA 402 apply to an audit?
• What sources of information about a service organisation, its services and controls might be
available from the audit client?
• What is the difference between a type 1 and type 2 report?
• When might a user auditor visit the service organisation?

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© 2022 Association of Chartered Certified Accountants
Module 7
Fraud in an Audit of Financial Statements

Introduction
This module explores the auditor’s responsibilities relating to fraud in an audit of financial
statements as set out in ISA 240. Specifically, it expands on how ISA 315 (Revised 2019) (Module
5) and ISA 300 (Module 6) are applied in relation to risks of material misstatement due to fraud.

ISA 240 – Definitions

• What is an error?
• What is fraud?
• What are fraud risk factors?

Types of intentional misstatement

• What two types of intentional misstatement are relevant to the auditor?

Responsibilities for the prevention and detection of fraud

Management and TCWG Auditor
• What are the respective responsibilities of • What are the responsibilities of the
management and TCWG? auditor?

• What is an unavoidable risk, even though the audit is properly planned and performed in
accordance with the ISAs? And why?

Risk factors
Fraudulent financial reporting
• How may management bias arise?
• What industry conditions may indicate fraud risk?
• What operating characteristics may indicate fraud risk?

Misappropriation of assets
• From what do these fraud risk actors arise?

Communications
• What matters should be communicated to management and TCWG, respectively?

Withdrawal from the audit engagement

• In what exceptional circumstances may the auditor be unable to continue an audit?

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© 2022 Association of Chartered Certified Accountants
Module 8
Audit Evidence

Introduction
This module explains the measures of sufficiency and appropriateness of audit evidence and
how evidence is obtained.

ISA 500
• What is the objective of the auditor?
• What are the different sources of audit evidence?
• What is meant by “appropriateness” (of audit evidence)?

Sufficiency and appropriateness

Sufficient
• What factors should be considered when determining the sufficiency of audit evidence?

Relevant
• What are “assertions’?
• Which assertions are relevant to classes of transactions for the period under audit?
• Which assertions are relevant to account balances at the period end?
• What is “cut-off”?
• How may the direction of testing affect the relevance of information to be used as audit
evidence?

Reliable
• What factors should be considered when determining the reliability of audit evidence?
• What must the auditor do if there is inconsistency in, or doubts about the reliability of, audit
evidence?

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Module 8
Audit Evidence

How is evidence obtained?

Risk assessment procedures
• What risk assessment procedures must be performed? (Hint: ISA 315 (Revised 2019))
• Is inquiry alone a sufficient risk assessment procedure?

Tests of controls
• What is a test of controls?
• When must tests of controls be performed? (Hint: ISA 330)
• Does inquiry alone provide sufficient audit evidence?

Substantive procedures
• What is a test of details?
• What is a substantive analytical procedure?
• When may substantive analytical procedures alone provide sufficient appropriate audit
evidence? (Hint: ISA 330)

Audit procedures
• What different audit procedures may be performed to obtain audit evidence?
• What is the difference between inspection and observation?
• What is the difference between recalculation and reperformance?

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Module 9
Substantive Procedures and Selecting Items for Testing

Introduction
This module describes substantive analytical procedures (ISA 520), audit sampling (ISA 530) and
written representations (ISA 580) in obtaining audit evidence. Finally, it considers the additional
substantive procedures relating to going concern (ISA 570).

ISA 520
• Can analytical procedures alone be used as substantive procedures?
• What factors affect the extent of use of analytical procedures?
• What is a “reasonableness” test?
• Are analytical procedures required to be performed near the end of the audit?

Selecting items for testing

• What are the three means for selecting items for testing?
• What are the two components of detection risk?

ISA 530
Definitions
• What is audit sampling?
• What is sampling risk?
• What are the two types of erroneous conclusion that may arise due to sampling risk?
• What is meant by tolerable misstatement/tolerable deviation rate?

Designing and selecting an audit sample

• What factors should be considered when designing an audit sample?
• What factors would increase sample sizes for a test of controls?
• What factors would decrease sample sizes for a test of details?
• What are the principal methods for selecting samples?

Testing and evaluating results

• How should the auditor treat a selected item if the audit procedure cannot be applied?
• How are misstatements/deviations projected?

Statistical vs non-statistical sampling

• What is statistical sampling?
• What is non-statistical sampling?

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Module 9
Substantive Procedures and Selecting Items for Testing

ISA 580
• What written representations must be obtained?
• What specific representations are required by other ISASs?

ISA 570
• For what period is management required to assess the entity’s ability to continue as a going
concern?
• What is “material uncertainty”?
• What additional audit procedures are required to be performed when there is material
uncertainty?

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Module 10
Specific Items

Introduction
This module describes the audit evidence that should be obtained for specific assertions
relating to inventory, litigation and claims and segment information as set out in ISA 501 Audit
Evidence – Specific Considerations for Selected Items.

Physical inventory count

• Which assertions are most relevant to the auditor’s attendance at physical inventory
counting?
• Must inventory be counted at the date of the financial statements?
• How should the auditor obtain audit evidence if inventory is under the custody and control
of a third party?
• What is a perpetual inventory system?

Segment information
• What is segment information?
• Which assertion relating to segment information requires specific considerations?
• How should the auditor obtain sufficient appropriate audit evidence relevant to this
assertion?

Litigation and claims

• Which assertion relating to litigation and claims requires specific considerations?
• What procedures should be performed to identify litigation and claims which may give rise
to material misstatement?
• When should the auditor seek direct communication with the entity’s external legal counsel?
• What written representation should the auditor request?

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Module 10
Specific Items

ISA 505
Definitions
• What is “external confirmation”?
• What is a positive confirmation request?
• What is a negative confirmation request?
• What is an “exception”?

External confirmation procedures

• What aspects of external confirmation procedures must be controlled by the auditor?
• Who may be an appropriate confirming party?
• What should the auditor do if management refuses to allow the auditor to send a
confirmation request?
• What alternative audit procedures should be performed in the case of non-responses for
accounts receivable balances?

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Module 11
Internal Audit

Introduction
This module describes how the external auditor uses the work of internal audit in obtaining
audit evidence and uses internal auditors to provide direct assistance in accordance with ISA
610 Using the Work of Internal Auditors.

ISA 610
• What is the objective of the external auditor?
• What is an internal audit function?

Appraisal activities
• What are the typical activities of an internal audit function?

Determining whether to use internal audit work

• What is the external auditor required to evaluate?
• When must the external auditor NOT use the work of the internal audit function?

The effect on external auditor’s procedures

• What factors affect the nature and extent of the external auditor’s audit procedures?
• What examples of work of the internal audit function can be used by the external auditor?
• How should the external auditor evaluate the adequacy of work of internal audit?
• Is the external auditor required to reperform any of the work of internal audit?

Direct assistance
• What is direct assistance?
• How does direct assistance differ from using the work of an internal audit function?
• In what circumstances must the external auditor not use an internal auditor to provide direct
assistance?
• What factors determine the nature and extent of work that may be assigned to internal
audit?

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Module 12
Completion and Review

Introduction
This module describes the matters associated with “completion and review stage” of the audit
before the audit can form an opinion.

Evaluation of misstatements (ISA 450 )

• What are “uncorrected misstatements”?
• How might the auditor reduce projected errors?

ISA 520
• What is the purpose of analytical procedures near the end of the audit?
• Are analytical procedures near the end of the audit a requirement?

ISA 560
• What, ordinarily, are the two types of event after the reporting date according to financial
reporting frameworks?
• What is a subsequent event according to ISA 560?
• What are the auditor’s responsibilities in respect of subsequent events?

The Auditor’s Responsibilities Relating to Other Information (ISA 720)

• What is “other information”?
• What are the auditor’s responsibilities for other information?

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Module 13
Forming an Opinion and the Independent Auditor’s Report

Introduction
This module describes the matters to be considered when forming an opinion and the contents
of the independent auditor’s report (ISA 700) including key audit matters (ISA 701), “emphasis
of matter” and “other matter paragraphs” (ISA 706) and “material uncertainty related to going
concern” (ISA 570).

Forming an opinion
• What factors must be considered in forming an opinion on the financial statements?

The auditor’s report (ISA 700)

• What are the contents of an independent auditor’s report?
• Which of these will be included only if applicable?
• How must an unmodified opinion be expressed?

Communicating Key Audit Matters (ISA 701)

• What is a key audit matter?
• What matters should not be included in the KAM section of an auditor’s report?

ISA 706
Emphasis of matter paragraphs
• What is an emphasis of matter paragraph?
• In what circumstances may an emphasis of matter paragraph be necessary?
• Where in the auditor’s report should an emphasis of matter paragraph be included?

Other matter paragraphs

• What is an other matter paragraph?
• In what circumstances may an other matter paragraph be necessary?
• Where in the auditor’s report should an other matter paragraph be included?

ISA 570
Existence of a material uncertainty
• What is the purpose of a “Material Uncertainty Related to Going Concern” paragraph in an
auditor’s report? In what circumstances should it be used?
• What disclosure is required in the financial statements?

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Module 14
Modified Opinions

Introduction
This module explains the form and content of an auditor’s report when the auditor cannot
express an unmodified opinion. It concludes with a comprehensive look at the auditor’s report
in the context of going concern.

Modifications to the opinion (ISA 705)

• What is a modified opinion?
• What does “pervasive” mean?
• What opinions complete the following table?
Nature or matter giving rise to Judgment about pervasiveness of effects/possible
modification effects
Material but not pervasive Material AND pervasive
Material misstatement
Inability to obtain sufficient
appropriate audit evidence
• When is the auditor required to express a qualified opinion? What details should be
included in the basis for modification paragraph?
• When is the auditor required to express an adverse opinion? What details should be
included in the basis for modification paragraph?
• When is the auditor required to disclaim an opinion? What details should be included in the
basis for modification paragraph?

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© 2022 Association of Chartered Certified Accountants
You have reached the end of the revision
guide. We hope you found it useful and feel
ready to take the assessment.

You should now be able to:

• Understand the requirements for the audit of financial

statements in compliance with International Standards on
Auditing (ISAs)

• Explain the role of the International Federation of

Accountants (IFAC)

• Be aware of the basic principles and essential procedures of

ISAs on a Standard by Standard basis

• Know how to apply ISAs in practice

• Feel ready to tackle the Cert IA Assessment.

If there are sections you still feel unprepared for, do go back to

the modules to consolidate your learning.

All the best

with your
assessment!
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© 2022 Association of Chartered Certified Accountants